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New Mortgage Rules Aimed at Cooling the Condo Market

16. February 2010

Federal Finance Minister Jim Flaherty announced changes to the way mortgages are given out in this country today that are said to help prevent a housing bubble from forming. The keyword being prevent, meaning the government is very clear that they do not believe a housing bubble exists. I would have to agree with the sentiment in this city, however, I would add as I have been saying on this blog for months, the current pace we are at is not sustainable.

Personally I am not a fan of government intervention in the markets in this way, however, I don’t think these new rules will dramatically affect the market in any significant way. It seems more than anything, the moves today are meant to send a message to Toronto condo buyers in particular that condo flipping is not cool and real estate investing is not the same thing as speculation. Flaherty even mentioned “multiple-condo markets” in his statements to the press. Hmmm…I wonder what cities he is referring to?

My thoughts on the 3 key points in the release:

Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.

Many lenders already do this by my understanding, so no big change here – if you want a 35 year amortization variable rate mortgage, you can get it, you just have to qualify for the mortgage funds at a 25 year fixed rate mortgage.

Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.

This change is so marginal that I don’t know why they did it other than to send a message that borrowing money against your home is just about always a really bad idea financially.

Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

This one is aimed at all those looking to buy with 5% down and flip in a year for a profit. Flaherty is looking right at you crazy capitalists and saying don’t even think about it.

For the full statement by the government of Canada after the jump. Questions or thoughts on this? I’d love to hear them – leave a comment or email me.

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5/5/5: 5 Units Under $500K Available for Purchase with only 5% Deposit

3. December 2009

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December 7th update: After posting this last first last Thursday, nearly every single unit has been sold. One great unit still remains, contact me for details.

Recently I have been encouraging my clients to see past the hype of the latest flavour-of-the-month condo projects and consider buying at existing new developments that may be as much as 80-90% sold out. Some of these are offering excellent value compared to their newly launched competitors.

Common wisdom says that the best time to buy a new condo is always at the VIP stage – the earliest possible point where prices will always be lowest. This is usually true, but when a developer sees a lineup outside his sales centre that is 2 blocks long before he opens his doors, rest assured he is going to tell his sales department to raise the prices because they are obviously not charging enough! The end result is many buyers who buy at these VIP events are shocked when they compare the price they paid with the price they thought they were going to pay based on pre-VIP sale advertised price points.

Here are 5 units that are currently available for purchase with only 5% total deposit at two great developments at King and Spadina – M5V and Victory, and one in Liberty Village – Liberty Market Lofts. This is a true 5% down, with nothing further due at occupancy.*

M5V Condominiums – “M17″ unit, 721 Sq Ft, 1+den, 29th floor, $442K
M5V Condominiums – “M30″ unit, 852 Sq Ft, 2 bed, 26th floor, $502K
M5V Condominiums – “M23A” unit, 763 Sq Ft, 2 bed, 30th floor, $471K
Victory Condominiums – “Darling A” unit, 765 Sq Ft, 2 bed, 11th floor, $405K
Liberty Market Lofts – 885 Sq Ft, 1+den, 5th floor, $385K

*Disclaimer: Limited time offer. Prices and conditions subject to change at any time. Information is deemed to be accurate but TrueCondos.com and Andrew la Fleur do not guarantee accuracy. Some conditions apply. Contact me for details.

The Modern on Richmond: 5% Deposit Now Available

15. January 2009

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If you are looking for a condo on the east side of downtown, The Modern on Richmond is offering a great promotion right now – 5% deposit & $10,000 price discount. Before I provide the details, please read this caveat on 5% deposit programs and contact me if you would like more information. (more…)